Centre may ease PLI scheme for AC and LED manufacturing firms

India may ease terms of agreement for air conditioner and LED makers selected for the Production Linked Incentive (PLI) scheme for white goods, enabling investments made after April 1 this year to be eligible for advantages under the programme.

Panasonic, Daikin, Bluestar, TVS-Lucas, Dixon, Havells and Syska are among the 52 firms that have invested Rs 5,866 crore under the PLI programme for LED lighting and white goods.

The scheme proposes incentives of 4-6% on incremental sales of goods made in India until FY29.

Anil Agrawal, additional secretary, Department for Promotion of Industry and Internal Trade (DPIIT), told the media that investments done after April 1, 2021, will be allowed for incentives for those who qualify in the PLI scheme. It is because they had declared the scheme in November last year. Firms making the cut will receive a one-year gestation period to install their plants.

The scheme is fund-limited, and the incentive amount is limited. For air conditioners, the limit is the net incremental sale of qualified product(s) up to five times the total threshold investment in the preceding financial year.

For LED lights, the limit is the net incremental sale of the eligible product(s) up to six times the total threshold investment in the preceding financial year.

The application window for the Rs 6,238 crore PLI scheme for white goods was from June 15 to September 15. Agrawal said that the department has selected IFCI Limited to serve as the project manager, which will assess the applications made. The incentive expenses are likely to be lower than the predicted payout of Rs 6,238 crore even if 50 firms get elected. The scheme is economical.

In total, 31 firms have committed around Rs 4,995 crore investment for AC components, and 21 firms have committed Rs 871 crore investment for LED components.

The scheme intends to make India self-reliant in the production of ACs and LEDs. Of the three elements of ACs, India is reliant on imports for copper tubes and aluminium foils. The domestic capacity of the third component, compressor, is likely to surge four times to 6 million units due to the scheme.

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